Balance Sheet and Common Stock Essay

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1) Hahn Company uses the percentage of sales method for recording bad debts expense. For the year, cash sales are $300,000 and credit sales are $1,200,000. Management estimates that 1% is the sales percentage to use. What adjusting entry will Hahn Company make to record the bad debts expense?
A. Bad Debts Expense 15000 Allowances for Doubtful Accounts 15000
B. Bad Debts Expense 12000 Allowances for Doubtful Accounts 12000
C. Bad Debts Expense $12,000 Accounts Receivable $12,000
D. Bad Debts Expense $15,000 Accounts Receivable $15,000 2) Using the percentage of receivables method for recording bad debts expense, estimated uncollectible accounts are $15,000. If the balance of the Allowance for Doubtful Accounts is $3,000 credit before adjustment, what is the amount of bad debts expense for that period?
A. $15,000 12,000
3) Intangible assets
B. should be reported as a separate classification on the balance sheet

4) Intangible assets are the rights and privileges that result from ownership of long-lived assets that
C. do not have physical substance

5) The book value of an asset is equal to the
D. asset’s cost less accumulated depreciation 6) Gains on an exchange of plant assets that has commercial substance are
A. deducted from the cost of the new asset acquired
Requgnized imedeitly
7) Ordinary repairs are expenditures to maintain the operating efficiency of a plant asset and are referred to as
D. revenue expenditures 8) Costs incurred to increase the operating efficiency or useful life of a plant asset are referred to as
A. capital expenditures 9) When an interest-bearing note matures, the balance in the Notes Payable account is
C. equal to the total amount repaid by the owner

10) The interest charged on a $200,000 note payable, at a rate of 6%, on a 2-month note would be
D. $2,000 11) If a corporation issued $3,000,000 in bonds which pay 10% annual interest, what is the annual net cash cost of this borrowing if the income tax rate is 30%?
D. $210,000 12) Hilton Company issued a four-year interest-bearing note payable for $300,000 on January 1, 2011. Each January the company is required to pay $75,000 on the note. How will this note be reported on the December 31, 2012 balance sheet?
A. Long-term debt, $300,000
B. Long-term debt, $225,000
C. Long-term debt, $150,000; Long-term debt due within one year, $75,000
D. Long-term debt, $225,000; Long-term debt due within one year, $75,000 13) A corporation issued $600,000, 10%, 5-year bonds on January 1, 2011 for 648,666, which reflects an effective-interest rate of 8%. Interest is paid semiannually on January 1 and July 1. If the corporation uses the effective-interest method of amortization of bond premium, the amount of bond interest expense to be recognized on July 1, 2011, is
A. $30,000
B. $24,000
C. $32,434
D. $25,946 14) When the effective-interest method of bond discount amortization is used
A. the applicable interest rate used to compute interest expense is the prevailing market interest rate on the date of each interest payment date
B. the carrying value of the bonds will decrease each period
C. interest expense will not be a constant dollar amount over the life of the bond
D. interest paid to bondholders will be a function of the effective-interest rate on the date the bonds were issued 15) If a corporation has only one class of stock, it is referred to as
A. classless stock
B. preferred stock
C. solitary stock
D. common stock 16) Capital stock to which the charter has assigned a value per share is called
A. par value stock
B. no-par value stock
C. stated value stock
D. assigned value stock 17) ABC, Inc. has 1,000 shares of 5%, $100 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2011. What is the annual dividend on the preferred stock?
A. $50 per share
B. $5,000 in total
C. $500 in total
D. $.50 per share 18)
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